FACTA Statement of Foreign Assets

Form 8938: Specified Foreign Financial Assets | Expats in Colombia

The USATax.co team is here to help you report all your foreign financial assets, including stocks, securities, mutual funds, and alternative investments.

While most expats move to Colombia for the low cost of living and high quality of life, they may be surprised about additional reporting requirements they might face when owning foreign assets such as Form 8938.

In addition to filing the FBAR, Form 8938 is usually the second requirement of U.S. taxpayers to report foreign financial assets that meet a certain threshold. This form is included with all the other forms and schedules needed for a comprehensive federal tax return (Form 1040).

Form 8938 was part of the Foreign Account Tax Compliance Act (FATCA) signed by President Obama in 2010 to prevent non-compliance tax reporting outside of the U.S.

financial assets defined by team of expert accountants in colombia

Foreign Financial Assets Defined

The maximum value threshold is much higher with Form 8938 than with the FBAR, yet a growing number of U.S. taxpayers are exceeding these thresholds, sometimes without even knowing it. What the IRS defines as foreign financial assets consist of:

Financial accounts: Any accounts maintained outside of the U.S., such as bank accounts from Bancolombia, Davivienda, Scotiabank, Colpatria, or other types of accounts like retirement accounts, mutual funds, deferred compensation plans, etc.

Stocks, bonds, and securities: If these are issued by a non-U.S. person and not held via an investment account.

Notes and bonds: If a non-U.S. person issues them.

Interest in a foreign entity: This includes foreign corporations, partnerships, estates, or trusts.

Residences and rental properties: If these are owned by a foreign corporation, partnership, estate, or trust.

The threshold for reporting with form 8938 is different based on the filing status of the taxpayer and where they maintain their residence. For those residing outside of the United States:

Married filing jointly

Foreign financial asset threshold of $400,000 on the last day of the tax year or $600,000 anytime during the tax year. This threshold counts if at least one spouse lives outside the U.S.

Married filing separately

The asset threshold reduces to $200,000 on the last day of the tax year or $300,000 at any time during the tax year.

Single

Foreign financial assets total more than $200,000 on the last day of the tax year or $300,000 anytime during the tax year.

Form 8938 vs. FBAR

There are similarities between Form 8938 and the Foreign Bank Account Report (FBAR ). However, each form is reported differently to separate entities. The FBAR is submitted to FinCIN independently of your tax return, while Form 8938 is part of your tax return to the IRS.

Similarly, both need to follow specific currency conversion guidelines in order to properly assess if your foreign financial assets in Colombia or internationally meet the threshold.

Form 8938 Filed By Professionals at USATax.co

Failure to file foreign financial assets can bring penalties starting at $10,000. Given the complexities surrounding Form 8938 and the FBAR, let the tax professionals at USATax.co assess all your foreign financial assets and provide the best recommendation for staying compliant with tax law. Contact us today to start streamlining all your tax reporting needs.

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